Origin to spin off animal-feed unit
Agri-Foods business Origin Enterprises is to spin off part of its animal-feed business under a deal announced yesterday.
The company will combine its Republic and Northern Ireland animal-feed ingredient import business into one operation across the entire island.
Under the terms of the deal, R & H Hall, which is owned by Origin, will combine its business in the Republic with W & R Barnett -- the largest grain trader in the North.
Barnett will acquire a 50pc interest in Hall. Both companies share silos in the North but have separate customer bases. In effect, Origin will dispose of half its interest in the Hall's feed-import activity.
Barnett is expected to pay consideration of some €26m as part of the deal, with Origin using the proceeds to "repay debt and ultimately to fund development of the group". The transaction is expected to be earnings neutral for the year ending 31 July 2011 and should be earnings accretive in subsequent years.
Barnett's Michael McAree will be managing director of the combined business. Last year, Hall recorded an operating profit of €5.1m on revenue of €301m.
The move follows a similar transaction which saw Origin's food assets combined with Batchelors Foods into a new company called Valeo two months ago.
Origin chief executive Tom O'Mahony said the transaction builds upon the successful partnership with Barnett.
"The creation of an all-Ireland platform significantly enhances the competitiveness and market positioning of our service offering and provides improved strategic support to our customers in the management of price risk and volatility," he said.
John O'Reilly of Davy Stockbrokers, who are advising on the deal, described the transaction as "smart".